Gold, silver prices down 40% from record-high: What to do?
What's the story
Gold and silver prices witnessed a significant spike on February 6. The surge was largely attributed to a weaker dollar, strong physical demand, and persistent geopolitical tensions. However, they are still far away from their record high levels (up to 40%). MCX gold April futures rose over 2% to ₹1,55,374 per 10g, while MCX silver March futures jumped almost 3% to ₹2,50,300 per kg. The rise was aided by short covering and fresh hedging activity amid global uncertainty.
Global trends
Precious metals in international market
The international market mirrored the domestic surge in precious metal prices. Spot gold rose 3.9% to $4,954.92 per ounce, recovering from losses during a volatile Asian trading session after a 3.9% drop on Thursday. Similarly, the spot silver jumped 8.6% to $77.33 an ounce after falling below $65 earlier in the day but was still headed for a weekly decline of over 8.7%.
Market dynamics
US dollar index falls sharply
The rally in gold and silver prices was mainly fueled by a sharp 0.20% fall in the US dollar index, making dollar-denominated bullion cheaper for international buyers. The prospect of interest rate cuts by the US Federal Reserve also supported gold prices. A University of Michigan report showed median one-year inflation expectations fell to 3.5%, the lowest since January 2025, boosting hopes for more Fed rate cuts in coming months.
Investor outlook
Geopolitical tensions continue to drive demand
On the geopolitical front, initial talks between the US and Iran were promising but lacked clarity on timing or direction for future discussions. Ponmudi R, CEO of Enrich Money, said ,"Profit booking and rising real yields triggered the pullback; however long-term fundamentals remain supportive." He added these include sustained central bank buying, constrained mine supply, strong industrial demand (particularly for silver), and ongoing geopolitical currency diversification trends.
Market forecast
MCX gold, silver outlook
Ponmudi believes that precious metals are stabilizing after last week's sharp sell-off. He said MCX Gold is stabilizing after correcting from the ₹1,78,000-₹1,80,000 zone with strong demand emerging near ₹1,50,000-₹1,55,000. "A sustained move above ₹1,60,000 could revive bullish momentum toward ₹1,70,000-₹1,80,000+ over the medium term," Ponmudi added. On silver's outlook he said MCX Silver has corrected into the ₹2,30,000-2,35,000 support region historically associated with strong physical industrial buying.